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Business/ Sports business Alt

Tours Remain Upbeat

Elina Frumerman

Photo: Jayne Kamin-Oncea / USA TODAY Sports

Photo: Jayne Kamin-Oncea / USA TODAY Sports

Bill Rapp has weathered economic downturns in his 26 years in tennis, the last eight as tournament director for the SAP Open, a men's event in San Jose, Calif. No alarm bells are sounding, but Rapp is not sitting idle.

With significant prize money increases next year and an economic crisis of unknown proportions, Rapp is taking precautions.

He has kept ticket packages at 2008 levels, though individual seats will increase by $1 to $2. He's bending over backward to keep sponsors happy. And he's doing all he can to attract a high-quality field even though he has fewer dollars for appearance fees.

"I'm making sure I'm over-delivering," Rapp says of the 32-draw tournament in February, which will pay $600,000 in prize money, a 40% jump from 2008.

Novak Djokovic and Venus Williams took home big paychecks as both tours wrapped up the 2008 season this month. But will those big dollars be there down the road?

While conceding no sport is immune to recession, WTA and ATP Tour executives say the international scope spreads the risk among sponsors and other corporate underwriters. They say the tours remain fundamentally sound even if tournaments could feel squeezed by shrinking sponsorship dollars and budget-conscious fans. They point out that key indicators of growth such as revenues, attendance and prize money continued to grow throughout 2008.

"Global sport does provide a natural hedge," says Larry Scott, CEO of the Sony Ericsson WTA Tour.

ATP officials emphasize that a recently completed audit found minimal exposure to sponsor dollars. Of the 63 events in 31 countries on the calendar, only six had yet to confirm a major sponsorship deal. Forty-eight had title sponsor deals in place. They also point to $1 billion in new stadiums and infrastructure upgrades in coming years.

For the WTA, 12 of the 50 scheduled events in 2009 are without title sponsors, though some government-backed events do not seek title sponsorship. 

But with tour-wide prize money increases — 34% on the women's tour to $47 million and 18% on the men's side to $82.3 million — set to kick in next year, tournaments must be nimble and smart.

"No matter where and when right now, the sponsorship market is pretty soft," says David Carter, a principal with Los Angeles sports consultancy the Sports Business Group. "The economy is affecting everyone."

Rapp remains upbeat even if sponsors are "tightening belts and may decide to take a break," he says. 

With less money left over for appearance fees, he has assembled a strong field so far, including defending champ Andy Roddick, James Blake, Lleyton Hewitt, Mardy Fish, Sam Querrey and Juan Martin del Potro. Negotiations continue with title sponsor SAP to extend beyond 2009, and Rapp is cautiously optimistic. "It's looking positive," he says.

Adam Barrett, tournament director of March's Sony Ericsson Open in Key Biscayne, Fla., says package ticket sales are slowing only slightly and interest from sponsors is high.

"Companies are going to spend, but we don't know how much," he says.

Like a lot of tournament directors, Barrett believes prize money increases in tennis are warranted but might have hit too swiftly.

"Where I believe we may have overextended ourselves is in the time frame in which we implemented those increases," says Barrett, noting that his combined event has gone from a total purse of $6.9 million to $9 million in two years.

Steve Simon, the director for the combined event in Indian Wells, Calif., says ticket sales are "tracking well" and remains optimistic the event will secure a new title sponsor before it begins March 9. The previous sponsor, Pacific Life, withdrew in August.

"It's not the first time the fair-haired child of the sponsorship world has changed or evolved," he says of the mutating landscape of corporate dollars. 

U.S. Open officials don't know yet how they will be affected. Major sponsorship deals with the likes of JPMorgan Chase, Lexus and IBM are not up for renewal until after 2009.

"We would be naïve to think that this won't have some effect on the U.S. Open,"USTA spokesman Chris Widmaier says.

On the court, officials stress that tennis has a long history and a number of compelling story lines, such as the rivalry between Rafael Nadal and Roger Federer. Emerging personalities such as Jelena Jankovic and Ana Ivanovic of Serbia, along with veterans Venus and Serena Williams, also remain big draws.

"We've been through crisis before," Brad Drewitt, head of the international group at the ATP, said last week. "We're very confident, given our history, the global nature of our sport, the strength of it, that we'll be able to manage our way through this situation."